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10 Reasons to Avoid Overtime and the New DOL Laws that increase its cost!

  • The new overtime rules that the Department of Labor have proposed from its authority under the Fair Labor Standards Act will cause for changes in our industry. But the years of studies of the negative effects that overtime creates still remain unchanged. The loss of productivity far exceeds any value from the overtime.

When the loss of productivity is added to the new higher wage cost with overtime premiums, productive value per wage dollar paid after several weeks of scheduled overtime drops to;

  • less than 75% for five 10-hour days
  • less than 62% for six 10-hour days
  • less than 40% for seven 12-hour days

“After four consecutive 50-60 hour weeks productivity is likely to be no more than that attainable by the same work force in a 40-hour week!”

Below are 10 reasons to avoid the use of overtime whenever possible,

  1. Work Pace Momentum – Workers output energy at an established pace determined by long periods of adapting. When the hours of work increase, there is a tendency to adjust the pace to accomplish about the same amount of work in an extended workday or workweek as was accomplished before the extension. Another factor is the fear of “running out of work” while waiting for other work to be performed.
  2. Absenteeism – The desire of workers to spend more time with their families, and need for time away from the job to take care of personal business combine with less need for money from working all available hours because of the high pay received during overtime weeks contribute to absenteeism.
  3. Accidents – Injuries also increased as hours increased, not only in actual numbers, but also in rate of incidences. The number of injuries per million hours worked was very much higher at the longer hours.
  4. Fatigue – Physical and mental fatigue build up at an accelerated rate from excessive hours on the job and lack of recuperating time off the job even when overtime work is resulting in little or no additional work being accomplished.
  5. Moral and Attitude – Fatigue causes a deterioration in morale and positive attitude. In addition, continuing expensive overtime can quickly result in an attitude that, “Cost means nothing to the customer, so why should we workers worry about efficiency?”
  6. Turnover – Turnover can be expected at an accelerating rate as overtime schedules continue because of fatigue, poor morale and attitude, and lack of monetary need to continue working.
  7. Job “Shopping” – In an area where one or more large projects have scheduled overtime, workers seem to spend more effort finding the project having the highest premiums than in getting the work accomplished. If other construction employers feel induced to schedule overtime to keep their share of the area work force, a daily “auction” for available manpower is likely to occur. The effects on productivity are obvious.
  8. Supervision Problems – Pressures resulting from scheduled overtime also cause supervisors to become careless, to make errors in judgment and to become irritable, thus adversely affecting their relations with workers and others.
  9. Stacking of Trades – Scheduled overtime almost always disrupts the orderly sequence of the original schedule. This results in space conflicts and undesirable mixing of employees of different crews and different contractors.
  10. Pressure for more overtime – It is common for jobs with scheduled overtime to have worker pressures for more overtime and slowdowns among workers receiving less overtime pay than others.

For the reasons above, it is important to review your contract terms concerning overtime and thoroughly review the proposed schedule for realistic production goals. Having a production measuring system can help in pressures to overtime use and compensation if you decide to allow for some.

The above information was assembled from studies conducted by the Bureau of Labor Statistics of the U.S. Department of Labor, Proctor and Gamble Company, The Business Roundtable, the National Electrical Contractors Association, and the Mechanical Contractors Association of America.

Comments are encouraged…..

Lee Clark
Lee Clark

As the CEO and co-founder of PayCrew, Lee Clark is passionate about the people in the field, because he understands the importance of trust between a company and its people. As a construction business owner, he saw first-hand how attracting and retaining skilled people form the foundation of a company’s success.

Lee has a passion for measuring daily performance in the construction industry and is also a regular contributor at Concrete Construction.